Gujarat Themis Biosyn Limited, Vapi V. The ACIT.,Vapi Circle, Vapi

ITA 2612/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2148 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 10-09-2015
• Court: TRIBUNAL

Judgement Text

ACIT-VAPI V. GUJARAT THEMIS BIOSYN LTD. /I.T.A. NO.2626/AHD/2014/A.Y.:10-11 & GUJARAT THEMIS BIOSYN LTD. V. ACIT- VAPI I.T.A. NO. 2612/AHD/2015/A.Y. 11-12 PAGE 1 OF 6 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER S N . . ./I.T. A NO. /A Y: APPELLANT V. /RESPONDENT 1 2626 /AHD/ 2014/SRT 2010 - 11 ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE - VAPI V. G UJARAT THEMIS BIOSYN LIMITED 69-C, GIDC INDUSTRIAL AREA GIDC VAPI PAN:AABCG0802C 2 2612/AHD/ 2015/SRT 2011 - 12 GUJARAT THEMIS BIOSYN LIMITED , 69-C, GIDC INDUSTRIAL AREA GIDC VAPI PAN:AABCG0802C V. ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE -VAPI /ASSESSEE BY SHRI A. GOPAL AKRISHNAN , CA /REVENUE BY SHRI B. P. K. PANDA, SR. D.R. / DATE OF HEARING: 27.06.2018 & 28.06.2018 /PRONOUNCEMENT ON: 28.06.2018 /O R D E R PER O. P. MEENA, ACCOUNTANT MEMBER. 1. THESE ARE TWO SEPARATE APPEALS ONE BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- VALSAD (IN SHORT THE CIT (A)) DATED 31.07.2014 PERTAINING TO ASSESSMENT YEAR 20010-11 AND OTHER ONE IS BY THE ASSESSEE WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT (A) VALSAD DTD. 09.07.2015 FOR THE ASSESSMENT YEAR 2011-12. I.T.A. NO. 2626/AHD/2014/A.Y. 2010-11: BY THE REVENUE: 2. THE SOLE GROUND OF REVENUE APPEAL RELATES TO DELETION OF ADDITION OF RS.19,55,979 MADE ON ACCOUNT OF SUNDRY CREDITORS EVEN THOUGH GENUINENESS AND CREDITWORTHINESS WAS NOT ESTABLISHED. 3. BRIEF FACTS ARE THAT THE AO NOTICED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITOR BALANCES, WHICH HAVE BEEN CARRY FORWARD FOR MORE THAN THREE YEARS OF WHICH DETAILS ARE GIVEN IN TABLE AT PAGE NO. 2 TO ACIT-VAPI V. GUJARAT THEMIS BIOSYN LTD. /I.T.A. NO.2626/AHD/2014/A.Y.:10-11 & GUJARAT THEMIS BIOSYN LTD. V. ACIT- VAPI I.T.A. NO. 2612/AHD/2015/A.Y. 11-12 PAGE 2 OF 6 6 OF ASSESSMENT ORDER AMOUNTING TO RS.19,55,979. IT WAS EXPLAINED VIDE LETTER DATED 25.02.2013 THAT THESE CREDITORS ARE OUTSTANDING DUE TO DISPUTE ON ACCOUNT OF PENDING LEGAL CASES AND FINANCIAL DIFFICULTIES. THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH NECESSARY CONFIRMATION FROM RESPECTIVE PARTIES AND THE AMOUNTS ARE STILL PAYABLE. SINCE UNDER THE LIMITATION ACT CREDITORS MORE THAN THREE YEARS ARE NOT PAYABLE. THEREFORE, THE AO WAS OF THE VIEW THAT SUCH CREDITORS ARE DOUBTFUL AND NON-GENUINE. HENCE, THE AO TREATED THE SAME AS UNAPPROVED HENCE, DISALLOWED THE SAME AND ADDED TO TOTAL INCOME. 4. BEING; AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). THE CIT (A) OBSERVED THAT IT HAS BEEN BROUGHT TO HIS NOTICE THAT ISSUE OF SUNDRY CREDITORS HAS ALREADY BEEN DECIDED BY ITAT AHMEDABAD IN I.T.A. NO. 1780/AHD/2010 DATED 22.09.2010 AND THEREAFTER, BY THE HON`BLE HIGH COURT OF GUJARAT IN FAVOUR OF THE ASSESSEE. THE CIT (A) HAS QUOTED THE FINDINGS OF TRIBUNAL IN HIS ORDER AND FOLLOWING THE SAME AS WELL AS HON`BLE HIGH COURT DELETED THE SAID ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS. 5. BEING, AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. SR. DR SUPPORTED THE ORDER OF THE AO. 6. PER CONTRA , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY DECISION OF TRIBUNAL IN I.T.A. NO. 366/AHD/2013 A.Y. 2009-10 DATED 10.05.2013 AS WELL AS BY THE HON`BLE HIGH COURT OF GUJARAT IN TAX APPEAL NO. 3 OF 2014 DATED 08.01.2014 IN ASSESSEE`S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN FAVOUR OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE AMOUNT WAS ACIT-VAPI V. GUJARAT THEMIS BIOSYN LTD. /I.T.A. NO.2626/AHD/2014/A.Y.:10-11 & GUJARAT THEMIS BIOSYN LTD. V. ACIT- VAPI I.T.A. NO. 2612/AHD/2015/A.Y. 11-12 PAGE 3 OF 6 PAYABLE AS ON LAST DATE OF FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AS PER BOOKS OF ACCOUNTS OF THE ASSESSEE DUE TO DISPUTE ON PAYMENTS, FINANCIAL DIFFICULTIES AND OTHER GROUNDS. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10, IN I.T.A. NO. 366/AHD/2013 DATED 10.05.2013. THE REVENUE HAS FILED AN APPEAL AGAINST THE DECISION OF TRIBUNAL DTD.10.05.2013 FOR THE ASSESSMENT YEAR 2009-10 BEFORE THE HON`BLE HIGH COURT. THE HON`BLE HIGH COURT OF GUJARAT VIDE ORDER DATED 08.01.2014 IN TAX APPEAL NO. 3 OF 2014 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: INSOFAR AS QUESTION A IS CONCERNED, IT PERTAINS TO LIABILITY TOWARDS SUNDRY CREDITORS TO THE EXTENT OF RS.40.72 LAKHS. THE ASSESSING OFFICER PRIMARILY ON THE GROUND THAT MORE THAN THREE YEARS HAD PASSED DISALLOWED THE CLAIM AND ADDED BACK THE AMOUNT TO THE INCOME OF THE ASSESSEE. IT WAS ALSO NOTED THAT DETAILS AND CONFIRMATIONS FROM CREDITORS WERE NOT PRODUCED. IN APPEAL, HOWEVER, THE ASSESSEE HAS SUBMITTED THE SCHEDULE OF THE CREDITORS FOR THE ASSESSMENT YEAR 2006-07 TO 2009-10, POINTING OUT THAT THERE WERE NUMBER OF COMMON CREDITORS DURING THE SAID PERIOD. IT WAS ALSO POINTED OUT THAT THE ASSESSEE COMPANY WAS A SICK COMPANY AND WAS BEFORE THE BIFR. THE COMPANY OWED MONEY TO SEVERAL CREDITORS. ON SUCH BASIS, THE CIT (APPEALS) REVERSED THE DECISION OF THE AO AND FURTHER APPEAL CONFIRMED THE VIEW OF CIT (APPEALS). IN VIEW OF SUCH FACTS, WE DO NOT SEE ANY ERROR IN THE DECISION OF THE AUTHORITIES BELOW. NO QUESTION OF LAW, THEREFORE, ARISES. 8. IN THE LIGHT OF ABOVE FACTS AND IN LAW, AND RESPECTFULLY FOLLOWING THE JUDGEMENT OF HON`BLE JURISDICTIONAL HIGH COURT OF GUJARAT, WE DO NOT FIND ANY MERITS IN THE APPEAL OF REVENUE. ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. I.T.A. NO. 2612/AHD/2015/A.Y. 2011-12/ BY THE ASSESSEE: 9. THE SOLE GROUND OF APPEAL BY THE ASSESSEE STATES THAT THE CIT (A) HAS ERRED IN CONFIRMING ADDITION OF RS. 27,14,691 MADE BY THE AO ACIT-VAPI V. GUJARAT THEMIS BIOSYN LTD. /I.T.A. NO.2626/AHD/2014/A.Y.:10-11 & GUJARAT THEMIS BIOSYN LTD. V. ACIT- VAPI I.T.A. NO. 2612/AHD/2015/A.Y. 11-12 PAGE 4 OF 6 IN RESPECT OF SUNDRY CREDITORS, WHICH WERE OUTSTANDING FOR LESS THAN THREE YEARS AS SUNDRY CREDITORS. 10. BRIEF FACTS ARE THAT THE AO NOTICED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITOR BALANCES OF RS. 27,14,691, WHICH HAVE BEEN CARRY FORWARD FOR LESS THAN THREE YEARS OF WHICH DETAILS ARE GIVEN IN TABLE PRODUCED AT PAGE NO. 6 TO 8 OF ASSESSMENT ORDER. IT WAS EXPLAINED THAT THESE CREDITORS ARE OUTSTANDING DUE TO DISPUTE ON ACCOUNT OF PENDING LEGAL CASES AND BEING SICK COMPANY. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH NECESSARY CONFIRMATION FROM RESPECTIVE PARTIES AND THE AMOUNTS ARE STILL SHOWN AS PAYABLE. THEREFORE, THE AO VIEWED THAT SUCH CREDITORS ARE DOUBTFUL AND NON-GENUINE AND THEREFORE, BOGUS. HENCE, THE AO TREATED THE SAME AS UN-APPROVED, HENCE, ADDED TO TOTAL INCOME. 11. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). BEFORE WHOM, IT WAS CLAIMED THAT CREDITORS WERE OUTSTANDING FOR GENUINE REASON AS THE ASSESSEE IS SICK COMPANY AND HAS NOT PAID ANY LIABILITY. IT WAS FURTHER SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY DECISION OF TRIBUNAL IN ASSESSEE`S OWN CASE ON SIMILAR FACTS. HOWEVER, THE LD. CIT (A) OBSERVED THAT THE ASSESSEE COMPANY HAS CLAIMED THAT IT IS SICK COMPANY, WHICH COULD NOT FULFILL THE COMMITMENTS. HOWEVER, THE FACTS REMAINS THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE CREDITORS AS GENUINE; HENCE, THE SUNDRY CREDITORS FOR LESS THAN THREE YEARS WERE UPHELD AS BOGUS CREDITORS. 12. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE CREDITORS HAVE NOT BEEN WAIVED OFF ANY THEIR RIGHT OF OUTSTANDING AMOUNTS. EVEN SOME OF THE CREDITORS GIVEN LEGAL NOTICE, LITIGATED ACIT-VAPI V. GUJARAT THEMIS BIOSYN LTD. /I.T.A. NO.2626/AHD/2014/A.Y.:10-11 & GUJARAT THEMIS BIOSYN LTD. V. ACIT- VAPI I.T.A. NO. 2612/AHD/2015/A.Y. 11-12 PAGE 5 OF 6 LAWFULLY PROCEEDED FOR ITS RECOVERY AND IN SUCH CASES MATTER IS STILL SUB-JUDICE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY DECISION OF THE TRIBUNAL IN I.T.A. NO. 366/AHD/2013 A.Y. 2009-10 DATED 10.05.2013 AS WELL AS HON`BLE HIGH COURT OF GUJARAT IN TAX APPEAL NO. 3 OF 2014 DATED 08.01.2014 IN THE ASSESSEE`S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN FAVOUR OF THE ASSESSEE. 13. PER CONTRA, THE LD. DR SUPPORTED THE ORDER OF LD. CIT (A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE AMOUNT WAS PAYABLE AS ON LAST DATE OF FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AS PER BOOKS OF ACCOUNTS OF THE ASSESSEE DUE TO DISPUTE ON PAYMENTS AND OTHER GROUNDS. THE ISSUE IS COVERED BY DECISION OF TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10, IN I.T.A.NO.366/AHD/2013 DATED 10.05.2013. THE REVENUE HAS FILED AN APPEAL AGAINST THE DECISION DTD. 10.05.2013 OF TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10 BEFORE THE HON`BLE HIGH COURT. THE HON`BLE HIGH COURT OF GUJARAT VIDE ORDER DATED 08.01.2014 IN TAX APPEAL NO. 3 OF 2014 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: INSOFAR AS QUESTION A IS CONCERNED, IT PERTAINS TO LIABILITY TOWARDS SUNDRY CREDITORS TO THE EXTENT OF RS.40.72 LAKHS. THE ASSESSING OFFICER PRIMARILY ON THE GROUND THAT MORE THAN THREE YEARS HAD PASSED DISALLOWED THE CLAIM AND ADDED BACK THE AMOUNT TO THE INCOME OF THE ASSESSEE. IT WAS ALSO NOTED THAT DETAILS AND CONFIRMATIONS FROM CREDITORS WERE NOT PRODUCED. IN APPEAL, HOWEVER, THE ASSESSEE HAS SUBMITTED THE SCHEDULE OF THE CREDITORS FOR THE ASSESSMENT YEAR 2006-07 TO 2009-10, POINTING OUT THAT THERE WERE NUMBER OF COMMON CREDITORS DURING THE SAID PERIOD. IT WAS ALSO POINTED OUT THAT THE ASSESSEE COMPANY WAS A SICK COMPANY AND WAS BEFORE THE BIFR. THE COMPANY OWED MONEY TO SEVERAL CREDITORS. ON SUCH ACIT-VAPI V. GUJARAT THEMIS BIOSYN LTD. /I.T.A. NO.2626/AHD/2014/A.Y.:10-11 & GUJARAT THEMIS BIOSYN LTD. V. ACIT- VAPI I.T.A. NO. 2612/AHD/2015/A.Y. 11-12 PAGE 6 OF 6 BASIS, THE CIT (APPEALS) REVERSED THE DECISION OF THE AO AND FURTHER APPEAL CONFIRMED THE VIEW OF CIT (APPEALS). IN VIEW OF SUCH FACTS, WE DO NOT SEE ANY ERROR IN THE DECISION OF THE AUTHORITIES BELOW. NO QUESTION OF LAW, THEREFORE, ARISES. 15. IN THE LIGHT OF ABOVE FACTS AND IN LAW, AND RESPECTFULLY FOLLOWING THE JUDGEMENT OF HON`BLE JURISDICTIONAL HIGH COURT OF GUJARAT, WE ARE OF THE VIEW THAT LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING ADDITION OF SUNDRY CREDITORS OF RS. 27,14,691 BEING LESS THAN THREE YEARS OUTSTANDING. THEREFORE, SAME ARE DIRECTED TO BE DELETED. ACCORDINGLY, APPEAL OF ASSESSEE IS ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2010-11 IN I.T.A. NO. 2626/AHD/2014 IS DISMISSED AND THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011-12 IN I.T.A. NO. 2612/AHD/2015 IS ALLOWED. 17. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.06.2018. SD/- SD/- ( . . /C.M. GARG) ( . . /O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DATED: 28.06. 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) THE CIT(A)4. / PR. CIT 5. , / D.R. (ITAT) 6. / GUARD FILE ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT